01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

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01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

Capital Management

Capitalization

Capitalization

Management Report

For insurance groups, capitalization is a key variable or parameter for the assessment of

risk-bearing capacity and thus an important performance indicator. Capital management

enables us to ensure that adequate capital is always available to meet the operational

needs of our companies and achieve optimal deployment and use of funds within the

Group. This allows us to comply with legal provisions as well as with the requirements of

regulatory authorities, rating agencies, analysts and clients, all of which have become

significantly more exigent in recent years. Major constituents of capital management

within the Gothaer Group are risk-oriented controls and Asset Liability Management

(ALM).

The equity of the Gothaer Group totalled €1.10 billion (PY: €0.98billion) at the end of the

financial year 2009. As a mutual insurance association, the Gothaer Group has no subscribed

capital. We generate equity exclusively by retention of earnings. In addition to

the revenue reserves of the Group parent, Gothaer Versicherungsbank VVaG, the equity

shown in the consolidated financial statements also includes the earnings of Group

companies generated after first-time consolidation. Also taken into account in the equity

of the Gothaer Group are unrealized gains and losses on investments available for sale.

Changes in equity are shown on page 97.

As well as Group equity, Gothaer capital management also covers so-called equity surrogates.

Equity surrogates include participation certificates issued by Gothaer as well as

subordinate liabilities. As of 31 December 2009, equity surrogates had an unchanged

carrying value of €299.7 million.

Management of debt financing in the form of bonds and loans also forms part of capital

management. As of 31 December 2009, Gothaer Group bonds and loans totalled €187.6

million (PY: €199.7 million). The decrease in the financial year resulted from the contractcompliant

redemption of bonds and repayment of loans.

The debt ratio of the Group (defined as debt capital, i.e. bonds and loans including noneligible

hybrid capital as a percentage of equity plus eligible hybrid capital) was thus

reduced from 18.7 % to 16.2 %.

Breakdown by type of capital €million

2009 2008

Equity 1,099.5 977.8

Equity surrogates

Participation certificates 35.0 35.0

Subordinate liabilities 264.7 264.7

Bonds and loans 187.6 199.7

Total 1,586.8 1,477.2

Gothaer Group Annual Report 2009 43

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